Contact us
CALL US NOW 1-888-GOLD-160
(1-888-465-3160)

National Debt Tops $22 Trillion

  by    0   0

The national debt has pushed beyond the $22 trillion mark.

According to Treasury Department data released Tuesday, the national debt now stands at $22.01 trillion. When President Trump took office in January 2017, the debt was at $19.95 trillion. That’s a $2.06 trillion increase in the debt in just over two years. 

And the pace of borrowing doesn’t show any signs of slowing down. The CBO projects that the 2019 budget deficit (government spending over revenue) will come in at $897 billion. That’s a 15.1% increase over the 2018 deficit of $779 billion.  (If you’re wondering how the debt can grow by a larger number than the annual deficit, economist Mark Brandly explains here.)

According to the CBO, the deficit will hit $1 trillion by 2022 and remain at that level or higher through 2029. Keep in mind, the CBO tends toward conservative projections. As Peterson Foundation CEO Michael Peterson put it, the $22 trillion milestone is “the latest sign that our fiscal situation is not only unsustainable, but accelerating.”

Although the economy is supposedly in the midst of a boom, US government borrowing looks more like we’re in the midst of a deep recession. Long-term US debt sales have risen to a level not seen since the height of the financial crisis. As we reported yesterday, according to Treasury Borrowing Advisory Committee calculations, the Treasury Department will need to sell a staggering $12 trillion in bonds over the next decade. Even without factoring in the possibility of a recession this will “pose a unique challenge for Treasury.”

Just consider the increasing amount of money necessary just to make interest payments on all of this debt. According to the Peterson Foundation, the US government already pays out $1 billion every single day just servicing the interest on the debt. It will fork out a staggering $7 trillion in interest payments over the next decade.

Growing debt coupled with soaring interest payments creates a vicious upwardly spiraling cycle. As debt grows, it costs more money to service it. That requires more borrowing, which adds to the debt, which increases the interest payments — and on and on it goes.

This is an underlying reason that the Federal Reserve simply cannot continue raising interest rates. The increasing number of bonds on the market alone will naturally push yields (interest rates) higher as a function of supply and demand. That may well put the Fed into a position of once again having to become a buyer of US Treasuries. In other words, more quantitative easing. Interestingly, the Fed is considering using QE “more readily” in the future. Perhaps the central bankers realize that there is no way the US government can continue this borrowing pace without the Fed monetizing the debt.

The Trump administration insists that its tax cuts will eventually pay for themselves by generating faster economic growth But as we have said repeatedly, high levels of debt retard economic growth. Several studies estimate that economic growth slows by about 30% when the debt to GDP ratio rises to about 90%. The CBO projects the US will hit 106% debt to GDP ratio in the next decade, but most analysts say the US economy is already in the 105% range.

Nevertheless, politicians in DC seem utterly unconcerned about the skyrocketing debt. Trump didn’t even mention the debt during the State of the Union speech and few people on Capitol Hill have made the growing deficits an issue. Peterson said despite the apathy in DC, we should be concerned about the skyrocketing debt.

Our growing national debt matters because it threatens the economic future of every American.”

Gold IRA Rollover to 401k

Get Peter Schiff’s latest gold market analysis – click here for a free subscription to his exclusive monthly Gold Videocast.
Interested in learning how to buy gold and buy silver?
Call 1-888-GOLD-160 and speak with a Precious Metals Specialist today!


Related Posts

West Virginia Legislature Approves Measure to Repeal Sales Tax on Gold and Silver Bullion

The West Virginia legislature has approved a bill that would take an important first step towards treating gold and silver like money instead of a commodity by repealing sales and use taxes on bullion. Related

READ MORE →

Consumer Debt Breaks Yet Another Record in January

Total consumer debt broke another record in January, according to the latest report by the Federal Reserve. Borrowing increased by $17.05 billion in the first month of 2019. The increase pushed overall consumer borrowing to a new $4.03 trillion record. That compares with $3.84 trillion in January 2018. That represents a 5.1% annual increase. Related

READ MORE →

China Increases Official Gold Reserves for Third Straight Month as Anti-Dollar Push Continues

the country of china shown on a globeChina added to its official gold reserves for the third straight month in February as the country continues efforts to minimize its exposure to the US dollar. The People’s Bank of China added 10 tons of gold to its horde last month. It has accumulated an additional 32 tons of the yellow metal since the […]

READ MORE →

Powell Pause for the Masses: Fed Chair Talks to 60 Minutes

Federal Reserve Chairman Jerome Powell took his dovish message to the masses during a recent 60 Minutes interview. Powell continued to talk about “patience” and reiterated that the Fed “does not feel any hurry” to push rates any higher. He also said the interest rate is “roughly neutral” at this point, calling the current 2.25-2.5% […]

READ MORE →

Modern Monetary Theory and the Green New Deal: A Match Made in Hell?

How will America pay for Alexandria Ocasio-Cortez’s Green New Deal? After all, as Peter Schiff said a few weeks ago, you can’t print wealth. But there is a growing number of people who seem to believe you actually can – at least indirectly. And they have an economic theory they claim backs them up. It’s […]

READ MORE →

Comments are closed.

Call Now